One-glance verdict
Undervalued
$91.64 our estimate vs market $63.21
Wall Street consensus: $85.40 (-6.8% lower than our fair-value estimate)
31% below our estimate, below the bear case
Fundamentals snapshot
Digi International Inc.
DGII · NMS · Technology · Communication Equipment
Current price
$63.21
52-week range
$35.15 - $86.84
Market cap
$2.40B
Balance sheet
Healthy
8.91x Adequate
Net debt $90.42M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 17.7% last year.
- Reward Returns 7.5% on equity, ahead of 40% of its peers.
- Reward Free cash flow was positive in 9/10 years.
- Risk Stock trades 9.5% above its 5-year average P/E.
What this company does
Digi International Inc.
Digi International makes specialized devices that help businesses connect their equipment to the internet, like smart routers and modules for things like remote temperature monitoring in restaurants or secure access to computers in far-off locations. Much of their money comes from selling these hardware products and from recurring revenue (payments that come in regularly, like a subscription) for their cloud services that help manage all these connected devices. This is important because it means they can sell the same customers more services over time, offering a steadier stream of income beyond just one-time hardware sales.
How the company got here
Digi International was founded in 1985 and initially made its name by producing multi-line serial data cards for PCs, which were essential for running early online bulletin board systems (BBSes). As the internet grew, this market declined, and Digi pivoted towards network-attached devices and industrial monitoring. Over the years, the company has grown through numerous acquisitions, expanding its expertise in areas like embedded systems, wireless technology, and specialized monitoring solutions. This strategic evolution has positioned Digi as a key player in the industrial Internet of Things (IIoT) space, focusing on connecting critical infrastructure and devices.
What it actually does
Digi International provides the technology that allows various devices and systems to connect to the internet and communicate with each other, especially in business and industrial settings. Think of it as the invisible infrastructure that makes 'smart' devices work. This includes hardware like routers and modules that enable wireless communication, as well as software that helps manage and monitor these connected devices. Their solutions are crucial for businesses that rely on reliable and secure connections for their operations, from factories to retail stores.
IoT Products & Services
This is Digi's largest business area and focuses on the hardware and core connectivity products. It includes things like cellular routers, which provide wireless internet access for devices, and cellular modules, which are small components that add cellular communication capabilities to other products. They also offer console servers for secure remote access to network equipment and various radio frequency (RF) products. Essentially, this segment provides the building blocks for connecting devices to the internet, often sold to other companies (Original Equipment Manufacturers or OEMs) who embed these into their own products.
IoT Solutions
This segment offers more specialized, application-focused solutions, often with a recurring revenue model, meaning customers pay a subscription fee. A key part of this is SmartSense by Digi, which provides wireless monitoring for things like temperature in food service or healthcare to ensure safety and quality. Another offering is Ventus, which provides managed network services. This segment is about providing complete solutions that go beyond just connectivity, offering monitoring, management, and specialized services to specific industries.
What management is betting on now
Digi's leadership is focused on increasing the amount of revenue that comes from recurring services and software subscriptions, as opposed to one-time hardware sales. This strategy aims to create more predictable income and stronger customer relationships. They are also investing in new product development, particularly in advanced cellular technologies and infrastructure management tools, to stay ahead in the evolving IIoT market. Additionally, the company is working to make its solutions simpler for customers to implement and manage, ensuring a smoother experience from initial setup to ongoing operation.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$25.49M
FY2025 Q1
$29.14M
FY2025 Q2
$25.73M
FY2025 Q3
$22.94M
FY2025 Q4
$27.52M
FY2026 Q1
$35.17M
FY2026 Q2
$40.84M
FY2026 Q3
$32.45M
Revenue
$138.67M
Net income
$15.74M
Diluted EPS
0.40
Operating cash flow
$33.31M
Free cash flow
$32.45M
Fetching…
Sources
Revenue
$130.74M
Net income
$11.30M
Diluted EPS
0.29
Operating cash flow
$41.48M
Free cash flow
$40.84M
Fetching…
Sources
Revenue
$122.46M
Net income
$11.71M
Diluted EPS
0.31
Operating cash flow
$35.63M
Free cash flow
$35.17M
Fetching…
Sources
Revenue
$114.34M
Net income
$9.98M
Diluted EPS
0.26
Operating cash flow
$28.00M
Free cash flow
$27.52M
Fetching…
Sources
Revenue
$107.51M
Net income
$10.24M
Diluted EPS
0.27
Operating cash flow
$23.95M
Free cash flow
$22.94M
Fetching…
Sources
Revenue
$104.50M
Net income
$10.50M
Diluted EPS
0.28
Operating cash flow
$26.29M
Free cash flow
$25.73M
Fetching…
Sources
Revenue
$103.87M
Net income
$10.08M
Diluted EPS
0.27
Operating cash flow
$29.72M
Free cash flow
$29.14M
Fetching…
Sources
Revenue
$105.05M
Net income
$11.86M
Diluted EPS
0.32
Operating cash flow
$26.43M
Free cash flow
$25.49M
Fetching…
Sources
Is it cheap or expensive?
Fair value $91.64 vs current price $63.21
Wall Street consensus is the average analyst price target: $85.40 (-6.8% lower than our fair-value estimate).
Our most-likely fair value is $91.64 a share — about 45.0% above today's price of $63.21, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $90.4M. Interest coverage 8.9x.
Net debt
$90.42M
Interest coverage
8.91x
Digi International Inc.'s profit covers its interest bill about 8.9 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
DGII
BASELINE
Digi International Inc.
Total debt $118.39M Interest coverage 8.91x This is the baseline the peer rows are being compared against.
Total debt $8.29M Interest coverage -6.34x -100% vs DGII This peer has almost no interest-payment cushion compared with DGII.
Total debt $228.20M Interest coverage 4.64x -48% vs DGII Carries about 1.9x less debt cushion than DGII.
Total debt $3.19B Interest coverage 6.81x -24% vs DGII Carries about 1.3x less debt cushion than DGII.
Total debt $642.50M Interest coverage 2.78x -69% vs DGII Carries about 3.2x less debt cushion than DGII.
What you should know
The case for and against DGII
3 Rewards
1 Risk
Rewards
-
Revenue grew 17.7% last year.
-
Returns 7.5% on equity, ahead of 40% of its peers.
-
Free cash flow was positive in 9/10 years.
Risks
-
Stock trades 9.5% above its 5-year average P/E.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
50.17x
Forward P/E
20.18x
P/B
3.50x
P/S
4.74x
EV/EBITDA
21.68x
PEG ratio
0.98x
Profitability
How much profit each dollar creates
Gross margin
64.9%
Operating margin
16.5%
Net margin
9.6%
ROE
7.5%
ROA
5.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.17x
Current ratio
1.13x
Quick ratio
0.73x
Total debt
$118.39M
Total cash
$27.97M
Growth
How the business has been compounding
Revenue TTM
$506.21M
Revenue 5Y CAGR
8.7%
EPS TTM
1.26
EPS 5Y CAGR
26.0%
Cash flow
How much cash the business throws off
Operating CF TTM
$138.42M
Free CF TTM
$105.33M
FCF margin
20.8%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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